U.S. consumer confidence sinks to record low

The business research firm said its consumer confidence index plummeted to 38.0, down from 61.4 in September, sounding alarms on consumer spending that drives the bulk of the economy, just ahead of the important year-end holiday shopping season.

Most analysts had expected a more modest decline to 52.0.

"The impact of the financial crisis over the last several weeks has clearly taken a toll on consumer’s confidence," Lynn Franco, the Conference Boards chief economist, said in a statement.

"This news does not bode well for retailers who are already bracing for what is shaping up to be a very challenging holiday season," she said.

The plunge in consumer confidence followed three consecutive months of modest gains. The research firm revised upward its September index to 61.4, from a prior estimate of 59.8.

Franco noted that the 23.4-point decline from September was the third-largest in the history of the series.

"In assessing current conditions, consumers rated the labor market and business conditions much less favorably, suggesting that the fourth quarter is off to a weaker start than the third quarter. Looking ahead, consumers are extremely pessimistic, and a significantly larger proportion than last month foresees business and labor market conditions worsening," she said.

Consumer’s outlook on their earnings and inflation also soured.